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HomemistoryYoda, Luke, the Dark Side and… Contact Lenses

Yoda, Luke, the Dark Side and… Contact Lenses

In the first of a two-part series, we consider corporate optometry’s offensive into the contact lens market… ahead of exploring strategies for independents to regain ground or work in a complementary way with the corporate optometry model.

A long time ago, in a galaxy far, far away….

It is a period of civil war known as Corporate Monopolisation.

Rebel spaceships – those agile little independents – have been reducing in market share relative to the mushrooming growth of the corporates, yet striking from a hidden base, they’ve won their first victory against the Corporate Monopolisation Empire.

The organisation has harnessed a strong internet strategy to grow its contact lens business from 11 per cent to a considerable 33 per cent within the past two years

During the battle, rebel spies fought over the Empire’s ultimate weapon, the Death Star – aka the Contact Lens, an innocuous tiny piece of plastic with enough power to destroy or build an entire industry.

Now, pursued by the Empire’s sinister agents, Princess Leia – custodian of the stolen Contact Lens that can save her people and restore vision and freedom to the galaxy – races home aboard her starship…

Some element of truth in the analogy? Perhaps.

The Star Wars analogy is apt. There is currently huge change in the market dynamics of our optometric industry with a distinct trend towards corporate monopolisation. Corporate optometry has been somewhat affectionately referred to as ‘the dark side’ of optometry, naturally inferring that independent optometry practices are the ‘rebel alliance’. Contact lenses have become one of the more clever and strategic weapons wielded in the considerable AU$3billion dollar battle for Australia’s total national eyewear market.1

On one side of the battlefield, Specsavers was recently awarded 2013 Retail Innovator of the Year for a multilevel marketing platform. The organisation has harnessed a strong internet strategy to grow its contact lens business from 11 per cent to a considerable 33 per cent within the past two years, and I have nothing but impressive respect for the savvy way in which Specsavers has achieved this growth.2

So what can independent optometry practices do to win the market back?

And what of the presence of the internet for contact lens competition in general?

As a specialty contact lens optometrist, and a huge advocate for the profound impact contact lenses can make on a patient’s life, it is very disheartening to hear some optometry colleagues say they plan to give up on contact lenses because the market is becoming increasingly competitive. To those optometrists, I would like to point out that within certain pockets of independent optometry, there are practices thriving because of their contact lens business. I would also like to bring out the C word – and before you get affronted, the C word I mention is ‘Corporate’. Because the reality of the world in which we live is that the aim of ‘Corporate’ optometry is to achieve market dominance and to monopolise the provision of general optometric care to patients.

Let’s explore this train of thought further by examining the shifting dynamics of the spectacle market for starters. Specsavers has now acquired 36 per cent of the prescription spectacle market, and our other strong corporate player, OPSM, has 17 per cent market share. Between these two corporate optometry models, that’s a total of 53 per cent of the prescription spectacle market. It’s a slim but most likely, ever increasing, monopoly over the spectacle purchasing patient market.3

If you want to talk about online competition, plug ‘buy spectacles’ into your favourite online search engine and you’ll find the multitudes of online frame companies are so desperate to gain traction in market share, that you can get a pair of glasses for as little as AU$7. It’s nothing but a race to the bottom – because at this price, quality control can only be an ‘add on’ extra.

With this in mind, and returning to my original argument, optometrists that use that logic of ‘increasing competition’ as a reason to give up on contact lenses, probably need to extend that logic to give up on glasses at the same time.

But rather than throwing in the towel, I am reminded of the great words from my friend and fellow specialty contact lens optometrist from Canberra, Andrew Watkins: ‘With every hurdle in life, there is opportunity’.

The Facts and Figures

According to Euromonitor’s report from February 2014, (one of the foremost bodies that publish marketing reports on industries, consumers and demographics in Australia) contact lenses hover at approximately 5.5 per cent of the total Australian eyewear revenue generated by spectacle lenses, frames, sunglasses and contact lenses and this is set to continue (Figure 1).

Figure 1. Forecast Sales by Category Value 2013-2018 Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

IBISWorld reports provide detailed financial analyses of Australian industries taking into account recent industry performance and five-year forecasts. According to IBISWorld’s recent analysis of optometry and optical dispensing In Australia, contact lens sales account for 7 per cent of the total revenue of the AU$3billion eyecare industry and will remain a constant significant market force for the next five years to come.4 Similarly, studies by Edwards, Keay, Naduvilath and Stapleton found the penetrance of contact lens wearers in the wider community is 5 per cent amongst the general population.5 These findings are all consistent with commonly held assumptions that most optometry practices derive an income of about 5 to 7 per cent of their turnover from their contact lens sales.

(Click here to view Figure 2)

What is Our Potential?

But what is the contact lens potential? Are we, as highly educated, innovative eyecare practitioners, fitting as many patient lenses with contact lenses as we could… or should?

Australia is internationally respected for our world class optometry teaching facilities and our optometry research institutions – just within Sydney, the School of Optometry and Vision Science at UNSW, the Cooperative Research Centre for Eye Research and Technology (CRCERT), and Helen Swarbrick heading up the Research In Orthokeratology Group (ROK GROUP) and the Brien Holden Vision Institute (BVHI).

Yet, according to Prof. Nathan Efron’s studies into international contact lens prescribing rates, our rates are unexpectedly average – globally, we sit in the middle of the pack when it comes to the number of new fits we prescribe as a percentage of the potential CL population (Figure 2).

Johnson and Johnson Vision Care studies have found that contact lens usage in Hong Kong sits at 58 per cent of the spectacle wearing population, Singapore at 47 per cent of the population, and China’s top six cities have contact lens usage rates at 50 per cent of the population. Australia punches in as a relative underperformer with just 36 per cent of the spectacle wearing population wearing contacts.6

Eef van der Worp, one of the leading contact lens authorities on hard scleral contact lenses, has completed some insightful national data comparisons that demonstrate our low rate of prescribing new hard contact lenses vs new soft contact lenses in comparison to countries such as Norway. Referring to Norway’s high rates of rigid contact lens prescribing compared to other countries, I have heard that Eef has said of his own countrymen, ‘when you think that wooden shoes are comfortable, the comfort of rigid lenses is going to be a walk in the park’.

Cultural differences aside, I think all of these studies demonstrate the huge contact lens prescribing potential we’ve left untapped.

Of course that’s not to say that all eye care practitioners are under-performing when it comes to promoting and fitting contact lenses. The ‘Obi Wan Kenobis’ of contact lens Jedis are Richard Lindsay and John Mountford. They’ve become so established in contact lenses that Richard’s practice does all the usual specs, premium lenses and premium frames, but in his own words, over 90–95 per cent of his patients are in contact lenses. Similarly, John Mountford has over 85 per cent of his patients wearing contact lenses, and impressively, 60 per cent of his practice revenue comes from contact lenses.

At theeyecarecompany, we’ve established a great mix of general practice with a strong skew towards specialising in contact lenses and consequently, approximately 35 per cent of our practice income derives from the latter.

Importantly, when we are talking about revenue from contact lenses, we are talking about income that is in addition to other traditional revenue avenues.

Speaking of the value of this extra revenue stream, Mark Hinds, with typical unexpected Hindsey eloquence says, “The proportion of our turnover that is attributed to total contact lens sales is around 30 per cent with steady growth. Don’t get me wrong, we love to sell fashion spectacle frames and high index spectacle lenses but it is nice to have a strong complimentary contact lens base also. With the contact lens sale, our patients are offered their sunglasses and optical frames at a discounted price, which helps us ‘upserve’ our patients, and further assist our balance sheet. It has been documented for years that the contact lens patient spends more over time compared to the non-contact lens wearer. So with that being said we cherish each contact lens wearer.”

What Would Yoda Do?

In a little deviation from the official Star Wars plot, if I was Yoda in the Star Wars trilogy (a character I’ve chosen because physically, I am about Yoda’s stature and build) I would encourage all rebel independents to mount a hostile takeover of the Death Star. It’s time to reclaim that clever little innocuous plastic medical device called a contact lens, and repurpose it as a cause for good in practice rather than ignoring its presence. I know that Yoda, in his wisdom, would definitely approve of this strategy.

Having picked the brains of some of the leading Jedis in specialty contact lenses across Australia and New Zealand, I know my contact lens supernerd friends approve too.

In the next issue of mivision, I’ll put forward recommendations and strategies from Australia’s leading
Jedis, so that together independents can work in harmony with the corporate optometry model and can win back the Empire’s ultimate weapon – the Death Star – and repurpose it as a powerful practice builder.

About Margaret Lam

Margaret Lam BOptom UNSW, OA, CCLSA, OSO, IAO President of the Cornea and Contact Lens Society of Australia (NSW).

Margaret Lam graduated from the University of New South Wales in 2001. She started theeyecarecompany in 2005, a small group of successful independent optometry practices that focus on professional eyecare and designer eyewear across four locations in greater Sydney and Sydney CBD.

She practises full scope optometry, but with a passionate interest in specialty contact lenses, retail aspects of optometry and successful patient communication. Her experience includes working in independent practices, chain practices and corporate multinational optometry practices and as a locum optometrist. Margaret has also worked in an advisory role with several leading contact lens companies, is a public speaker on topics spanning contact lenses, specialty contact lenses, practice building, successful patient communication, and retail aspects of optometry.


References

1. IBIS Report, Optometry and Optical Dispensing in Australia, June 2014. Many thanks and appreciation to Karen Fowler and Alcon for data

2. mivisionclean2.flywheelsites.com/specsavers-market-winning-tactics-attract-awards

3. mivisionclean2.flywheelsites.com/specsavers-market-share-heads-toward-40

4. IBISWorld report, Optometry and Optical Dispensing In Australia Report, June 2014

5. Edwards K, Keay L, Naduvilath T, Stapleton F. A population survey of the penetrance of contact lens wear in Australia: rationale, methodology and results. Opthalmic Epidemiol 2009 Sep-Oct;16(5):275-80. http://www.ncbi.nlm.nih.gov/pubmed/19874106 Ophthalmic Epidemiol

6. TNS Incidence data, 15-39yo, among economically viable population of each market Note: No income cut-off for Australia. Screenouts (those who are not qualified for the whole survey) have been taken care of. The base here is among Johnson and Johnson Visioncare tools users only, meaning that if there are 100 Visioncare tools users, then 36 are using contact lenses in Australia. Courtesy, appreciation and thanks to Jacob Kandathil and marketing team from Johnson and Johnson for data.